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Courts to rule on Arcelor-Mittal merger

The proposed merger of Mittal Steel and Arcelor could be delayed this week if a group of dissident Arcelor shareholders can convince European courts that they are being forced to take a low-ball offer for their shares.

Minority hedge fund investors - including SRM Global Master Fund Limited Partnership, Trafalgar Catalyst Fund and Trafalgar Entropy Fund - have filed suit in a Dutch court. A small group of individual minority shareholders have filed suit in a French court. The courts are set to rule on the case on Monday, a day before Mittal Steel shareholders meet to approve the first of two phases of the merger.

The minority Arcelor shareholders, some of whom bought stock last year after Netherlands-based Mittal bid for Luxembourg-based Arcelor, want the payment terms for the deal to be subject to Dutch or French law where greater shareholder protections might be available, rather than solely Luxembourg law. Arcelor shares are listed in France and the Netherlands.

Lakshmi Mittalâ€™s ambitious efforts to extend his global steel empire in China have run into rough weather.

A bid by Arcelor Mittal, the world's biggest steel company, for a 38.4% stake in Laiwu Steel Corporation, one of China's largest producers, may have to be scaled back or even scrapped altogether, sources said.

Chinese officials are understood to have expressed discomfort with the idea of Arcelor Mittal owning sizeable stakes in two of the key players in China's fast-growing steel sector, one of a list of so-called 'strategic' industries which the government has determined should remain under domestic control.

The difficulty has arisen because in 2005 Mittal acquired a 36.7% stake in Hunan Valin Steel Tube & Wire Co. The Laiwu deal was originally declared by Arcelor in February last year, prior to its merger with Mittal Steel.